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Kramer Service Corporaton bought a building lot to construct a new corporate office building. An older home that was situated on the building lot was

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Kramer Service Corporaton bought a building lot to construct a new corporate office building. An older home that was situated on the building lot was razed immediately so that the office building could be constructed. The cost of purchasing the older home should be:
1) recorded as part of the cost of the land.
2) written off as a loss in the year of purchase of the building lot.
3) written off as an extraordinary item in the year of the purchase.
4) recorded as part of the cost of the new building.
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